The global regulatory environment and its corresponding compliance workforce have been the focus of our team’s recruitment efforts and many of our clients’ hiring needs and headaches as well. The implementation of new regulations coupled with the increased or decreased focus on existing ones, has led to compliance maintaining its position as one of 2017’s more active and hot markets for hiring. This 2018 market update will focus on developments in the compliance and regulatory field and how this has affected hiring patterns and focal points within the market. Some of the largest financial institutions in the world have found themselves in the headlines of LinkedIn updates and news articles updating the general public on settlements and fines from infractions caused by a lack of adequate compliance measures. Whether these are fresh violations and shortcomings, or the final results of investigations stemming from decade-old practices during the financial crisis that led to compliance’s surge into the spotlight in the first place, the effect remains the same. A significant number of institutions are continuing to bolster their ranks within compliance in order to ensure their programs are effective and, in some cases, to satisfy any regulatory mandate or order to improve any of these programs that appear lackluster.
Our market update for the summer of 2018 will showcase our opinions and observations on the compliance market’s overall outlook and hiring trends. Some of these trends are directly correlated to changes in the market, such as the emergence of GDPR, the cutbacks on Dodd-Frank, and the dynamic nature of the technology compliance world, and others are more governance and long-term focused. Perhaps one of the most active areas of development is the data management and analytics side of compliance. As cyber security and technology continue to develop, the need for technological advancements and the proper data procedures and processes have become paramount. The overarching theme within compliance seems to be a shift towards the longevity of these programs and the sustainability of everything that has been built thus far. Governance, testing, and program management skill sets have become valuable tools to ensure this stability, and project management, advisory, and transformation backgrounds have become much needed for newer compliance programs or institutions that may be later to the game or are undergoing significant improvements.
One of the most notable changes this year has been brought to us by President Trump as he recently announced a Dodd Frank Rollback. Originally known as “the Dodd-Frank Wall Street Reform and Consumer Protection Act,” this act created financial regulatory processes to limit risk by enforcing transparency and accountability. What does this rollback mean for banks? This reduces regulations for a lot of community and mid-sized banks, as under the original bill, banks with more than $50 billion in assets were subject to more rigorous regulations, including undergoing the Federal Reserve's annual stress tests. With the rollback in place the threshold is raised to $250 billion in assets. This bill is beneficial to smaller banks as it loosens mortgage regulations, now protecting banks and credit unions with less than $10 billion in assets. Under the previous version of the bill, banks were only protected up to $2 billion in assets. Some praise the new bill saying it will free up more lending, giving smaller to mid-size banks a better chance to compete with the bigger banks. Some criticize that this change will only heighten the risk of a financial crisis in the future; of course time will tell.
When talking about changes in finance we must consider the impact that technology has had on the industry, and all the changes that have arisen as a result. With the emergence of online and mobile banking Forbes reports that the number of physical banks has dropped by almost half since 1995 to 2015, also noting “40 percent of Americans have not gone to a bank or credit union within the last six months” (Forbes). What’s interesting about this change is how it highlights the intersection of Finance and the tech world, and exemplifies why FinTech firms and institutions focused on quantitative or high-tech trading are now on the rise. Practicing what is known as disruptive innovation, many FinTech firms are changing how we bank, spend, and mange money. Unlike banks, many of these firms are not subject to as strict financial regulations allowing them to give consumers more freedoms without too much of the regulatory scrutiny. That being said, all this can change as there has recently been an increase on the demand for regulation of FinTech services. Recently a term known as “Sandboxes” has been discussed amongst regulators and in the FinTech space. “The general concept of a sandbox is to create a special relationship between a company and the applicable regulator where innovations can be tested with real customers without the full burden of regulation” (American Banker). For now “Sandboxes” are still being debated in the U.K. as well as Arizona, and now Chicago. As FinTech firms expand and their services grow in popularity, it will be interesting to see how such regulations evolve and change with time and how these “Sandboxes” are utilized.
As important as it is to protect consumers’ direct investments or finances through regulations, it is also just as important their data is protected as well. In previous years there has been a high amount of cyber attacks on financial institutions. Such attacks have resulted in the theft of users’ personal information and a direct impact on deposited funds or investments. As a result of these cyber attacks worldwide, the European Union has put in motion a “General Data Protection Regulation” or GDPR. This regulation is designed to increase data protection for all citizens of the EU. All companies doing business in Europe or interacting with EU clients must be compliant with this new regulation, and those that are not compliant may be subject to large fines. This increased pressure on institutions to focus on using technology more efficiently and cautiously should ensure that financial firms’ services and products are safe and secure for all users. The emphasis on data has led to an increase in data governance/management roles in the market, with compliance technology and roles focused on advisory compliance in this space also seeing a bump in demand. All of these changes also create more opportunities for individuals with a regulatory transformation or change management background as well.
Talent on the Move
Overall, hiring within compliance has reacted to these various changes, and generally speaking it has certainly been a candidate’s market in several key areas. With unemployment at a very low rate and the need for this specialized talent and experience in specific verticals or practice areas of compliance, candidates have found themselves juggling multiple opportunities and firms have found themselves paying a higher price than in the past. Counteroffers have also become commonplace and even expected in the recruitment process. This also has led to a competitive offer being put forward in order to minimize that risk no matter how generous of a counteroffer may be on the table. At the end of the day, counteroffers are frequently debated in the industry, but for the most part they are usually a temporary fix with many of the original issues behind a candidate’s search not being fully addressed (click here to see why you should never consider a counteroffer). Candidates who have gotten into compliance management find themselves on an accelerated career path and roles within advisory compliance have certainly become attractive to candidates. Experience in this function is certainly in-demand for many firms looking to enhance their compliance programs and overall compliance culture. A compliance professional with the necessary regulatory knowledge, background building or improving these programs and executing them and the ability to interact effectively with senior management as a subject matter expert, is certainly a strong profile. Generally speaking we have seen a boost in demand for backgrounds focused on surveillance, regulatory change, data governance and management, sanctions, and advisory compliance.
There are a variety of other backgrounds that have become in demand due to the expanding scope of compliance and the relevant skill sets that are not traditionally associated with a typical compliance background. Consultants coming from the Big 4 or other firms have found institutions offering them an increase in salary to stop traveling and focus the consultants’ project management experience on the firm’s specific project on a permanent basis. QA or testing roles have taken candidates from other areas, such as audit, and strong regulatory counsels or attorneys have landed in advisory roles that utilize their writing skills and understanding of the regulatory landscape. Individuals focused on technology or data can transition into roles just focused on financial crimes technology or governance and management positions. Backgrounds coming from the SEC and FinTech compliance realm have found themselves in prime position to take advantage of the materialization of cryptocurrency and blockchain start-ups and their growing need for experience compliance professionals. All of these opportunities have pulled in different candidates from outside of the compliance world, and the need for capable and seasoned talent has remained for those seeking opportunities.
To summarize, the compliance field has been an exciting market to recruit in and looks to continue that trend for the foreseeable future. The market has seen the typical compliance program reinforced and equipped for enduring success, no matter the conditions or regulatory changes. Talent is at a premium, and the competitive nature of all hiring searches has been amplified by the needs of various institutions. Hiring managers face many challenges in attracting the appropriate talent, and candidates may find themselves with many options to filter through initially. Fortunately, having a high-level view of the industry and a familiarity with some of the more active and qualified firms and candidates allows Selby Jennings to help in the majority of circumstances. If you would like to connect in the market in general, or discuss a specific search, please do not hesitate to reach out and begin a conversation.
Selby Jennings is a leading specialist recruitment agency for banking and financial services. For more than 15 years, we have given clients and candidates peace of mind that the recruitment process is in expert hands. Our continual investment in best-in-class technologies and consultant training enables us to recruit with speed, precision and accuracy. Today, Selby Jennings provides contingency and retained search recruitment across 11 offices in 6 countries. Contact us to find out how Selby Jennings can help you.